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Protecting Yourself From Contractor Fraud Cases

contractorfraud Protecting Yourself From Contractor Fraud Cases

Thoughts of security alarms and fences may spring to mind when thinking about how to protect your home. However, it needs more than just protection than that. When you have any work done that requires a contractor it’s important to have a contract in place. It will lay out the expectations and deadlines for the work being done. A contract will also give you more leverage should your contractor provide you with work that is less than ideal.

It can often be confusing as to what your rights are as a homeowner when it comes to these contracts. While we can’t provide you with legal advice, we can give you a few things to consider when it comes to protecting yourself from costly legal battles.

Steps to Not Get Taken Advantage Of

When it comes to drafting up a contract, it might sound like common sense, but it’s important to go through the entire document with a fine tooth comb.

Are there any hidden costs that weren’t discussed in the initial conversations with your contractor?

Is there a final estimated deadline for the completion of the project?

These are some of the many things to look out for before you sign anything. This is especially important since many contractors will use their own standard contracts. Here are a few more ways to protect your rights and ensure that you are getting a fair deal.

Consult with an Attorneyattorney

For major home renovations and remodels that require a general contractor to oversee the project, it would behoove you to have an ironclad contract in place. While you could conduct the project using the honor system—which we do not suggest—this will leave you open to being taken advantage of by unscrupulous people.

You can hire an attorney who specializes in contracts to review the agreement before you sign anything. Most attorneys will give you a free consultation to make sure that they can advise you on the contract. For less than $500, you can sleep more easily by having someone else take a look at the agreement to make sure that everything is on the up and up.

Request an Arbitrator If Things Go Wrong

Within your contract, there should be a clause that states that you can request an arbitrator to mediate any issues that arise. For example, if you feel that the work done by the contractor is subpar then your first thought might be to not pay for the service. Don’t act on that. Refusing to pay can lead to a lien being placed on your home for non-payment.

Instead, you can have a third-party hear both sides of the situation and help you come to an agreement. This is a good alternative if you want to avoid the court costs and legal fees.

Go to Small Claims Court

If all else fails and your contractor refuses to make things right, then it is your right to take the matter to small claims court. Depending on your state, the award amounts can range from $2,500 to $25,000. Keep in mind that you will need to pay for the initial filing fees (which also vary from state to state) and prove that the work done was insufficient or that there was a breach of contract.

Get It All in Writingcontract

It happens. Unexpected costs can occur beyond the agreed upon cost of the project. Any contract between you and the contractor needs to have a stipulation in place that states that all additional costs must be provided in writing. Subcontractors will provide the general contractor with estimates that they will then pass on to you for approval. These costs must also be approved by the homeowner before moving forward with the work.

Make Sure That the Subcontractors are Paid

You might think that a construction or renovation project is going along smoothly. The work is done and the contractor has been paid. Of course, you would assume that the contractor has also paid the subcontractors with the money you’ve paid for the project. This is until you begin to receive notices for overdue payment.

This is a very unpleasant surprise to receive.

You can ensure that your subcontractors are paid for their work by requesting that your contractor have a payment bond. You can build this as a clause in the contract. These are required by the government for projects exceeding $35,000 and ensures that the subcontractors and suppliers are paid for their work.

Stick to Your End of the Deal

Your contract should also contain a schedule of payments to your contractor. To protect yourself from having a lien being placed on your home for non-payment, you need to make sure that your contractor receives payment in a timely manner.


As a homeowner, there are things that you can do to mitigate your exposure to risk. By having the proper contract in place and reviewing it before signing anything will help you to avoid costly disputes.